The move has been resisted by Labor and Greens MPs as well as the Teachers Federation of NSW.

The Teachers Federation Representative for TAFE Far West says, about the legislation, "Quite frankly, I was shocked."

"It's coming from a desire of the government... to cut their costs by devolving their responsibility for the wages and conditions of TAFE teachers.

"Unfortunately that's going to have a really detrimental effect on communities like Broken Hill, that so much depend on their local TAFE."

Greens NSW MP John Kaye says the legislation, which would separate TAFE teachers from their state school contemporaries, could have negative consequences for all regional areas.

Mr Kaye believes the legislation is paving the way for a broader policy of privatisation for the NSW TAFE industry.

"Getting TAFE out of the state award and... forcing it into the federal awards system, the federal enterprise agreement system, means it would be much easier to make TAFE a privatised entity; an entity that competes purely on the open market for dollars and for students."

Regional areas are set to lose the most if the TAFE system is privatised, according to Mr Kaye.